MSP RECOVERY CLAIMS, SERIES LLC

v.

AUTO-OWNERS INSURANCE COMPANY

ORDER DENYING PLAINTIFFS’ MOTION FOR CLASS CERTIFICATION

This matter is before the Court on Plaintiffs’ Motion for Class Certification [DE 109]. The Motion is fully briefed [DE 109, 114, 116]. The Court has considered the foregoing, the record, and the applicable law. Plaintiffs have failed to define the classes in a manner which are ascertainable and adequately defined. Further, reasonable interpretations of the class definitions result in individualized attention to defenses to liability or offsets on reimbursable amounts. As such, Plaintiffs have not satisfied the Federal Rule of Civil Procedure Rule 23 requirements. Thus, Plaintiffs’ Motion is DENIED.

I. Background1

Plaintiffs, as assignees of Medicare Advantage Organizations² (“MAOs) and downstream entities, bring this putative class action to recover from

Defendants, no-fault auto insurers, automobile accident-related medical payments the MAOs and downstream entities allegedly paid on a conditional basis. Plaintiffs allege that the Defendants were obligated to pay these conditional payments but did not. Plaintiffs seek not only reimbursement but also double damages from Defendants.³

II. Legal Standard

A. Medicare Secondary Payer Act

Medicare contracts with private MAO entities and other downstream entities to pay certain Medicare beneficiaries’ healthcare costs. See MSP Recovery Claims, Series LLC v. American Nat’l Prop. & Casualty Co., 550 F. Supp. 3d 1311, 1314 (S.D. Fla. July 22, 2021) (citing MSP Recovery Claims, Series LLC v. ACE Am. Ins. Co., 974 F. 3d 1305, 1308 (11th Cir. 2020)). The Medicare Secondary Payer Act (“MSPA”) made Medicare coverage secondary to other forms of insurance. See id. If a Medicare beneficiary has overlapping coverage arising from Medicare and another

To help ensure Medicare is not saddled with costs that should be covered by primary insurance payers, liability and no-fault insurers must report to the Center for Medicare & Medicaid Services (“CMS”) when they may have primary payer responsibility for the healthcare costs of Medicare beneficiaries. See 42 U.S.C. § 1395y(b)(8). In addition, the MSPA creates a private cause of action against primary payers that fail to reimburse MAOs for conditional payments made on behalf of Medicare beneficiaries. See id. § 1395y(b)(3)(A); see also ACE Am. Ins. Co., 974 F. 3d at 1316 (holding any MAO or downstream entity suffering unreimbursed conditional payments may bring claims under section 1395y(b)(3)(A)). Specifically, § 1395y(b)(3)(A) establishes a private cause of action for damages, “. . . in the case of a primary plan which fails to provide for primary payment (or appropriate reimbursement) in accordance with paragraphs (1) and 2(A).” Relevant for this case, 2(A) refers to 2(B) entitled “Conditional Payment” which provides that “a primary plan, and an entity that receives payment from a primary plan, shall reimburse the appropriate [Medicare entity]” for any conditional payment with “respect to an item or service if it is demonstrated that such primary plan has or had a responsibility to make payment with respect to such item or

Glover v. Liggett Group, Inc. 459 F. 3d 1304, 1309 (11th Cir. 2006) (examining 42 U.S.C. § 1395y(b)(3)(A)). A primary plan’s responsibility for such payment may be demonstrated by a judgment, a payment conditioned upon the recipient’s compromise, waiver, or release (whether or not there is a determination or admission liability) of payment for items or services included in a claim against the primary plan or the primary plan’s insured, or by other means. § 1395y(b)(2)(B)(ii).

These statutory parameters create an insurmountable hurdle for Plaintiffs in this action.

B. Class Certification

As an “invention of equity,” class actions serve many useful purposes, including promoting efficient use of judicial resources. Phillips Petro. Co. v. Shutts, 472 U.S. 797, 808 (1985). In addition, this procedural vehicle “may permit the plaintiffs to pool claims [that] would be uneconomical to litigate individually.” Id.

at 809. Class certification, however, is an “exception to the usual rule” that parties

District courts have broad discretion whether to certify a class. Washington v. Brown & Williamson Tobacco Corp., 959 F. 2d 1566, 1569 (11th Cir. 1992) (citation omitted). A proposed class must first be “adequately defined and clearly ascertainable.” Carriuolo v. Gen. Motors Co., 823 F. 3d 977, 984 (11th Cir. 2016). If this prerequisite is met, courts then turn to the four requirements of Rule 23(a):

numerosity, commonality, typicality, and adequacy of representation.6 Sellers v. Rushmore Loan Mgmt. Servs., LLC, 941 F. 3d 1031, 1039 (11th Cir. 2019). A plaintiff must also meet the requirements of Federal Rule of Civil Procedure 23(b). Cordoba v. DIRECTV, LLC, 942 F. 3d 1259, 1267 (11th Cir. 2019) (citation omitted). To certify a Rule 23(b)(3) class action, questions of law or fact common to class members must predominate over any questions affecting only individual members,

(2) there are questions of law or fact common to the class [(“commonality”)];

(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class [(“typicality”)]; and

(4) the representative parties will fairly and adequately protect the interests of the class [(“adequacy”)].

Fed. R. Civ. P. 23(a). and the class action must be “superior to other available methods.” Carriulo, 823 F. 3d at 985. The court must conduct a “rigorous analysis” to determine whether the party proposing class certification has met its burden. See Gen. Tel. Co. of Southwest v. Falcon, 457 U.S. 147, 161 (1982); Sacred Heart Health Sys., Inc. v. Humana Military Healthcare Servs., Inc., 601 F. 3d 1159, 1169 (11th Cir. 2010) (citation omitted). This is not a pleading standard; Rule 23 must be satisfied with evidence. Comcast Corp. v. Behrend, 569 U.S. 27, 33 (2013). This analysis may “‘entail some overlap with the merits of the plaintiff’s underlying claim,” but the court may not engage in “free-ranging merits inquiries” at this stage. Amgen Inc. v. Conn. Retirement Plans and Trust Funds, 568 U.S. 455, 465-66 (2013) (citations omitted). A court may consider the merits only “to the degree necessary” to analyze Rule 23. Heffner v. Blue Cross & Blue Shield of Ala., Inc., 443 F. 3d 1330, 1337 (11th Cir. 2006) (citation omitted). III. Parties’ Positions

A. Overview

As discussed above, Plaintiffs seek to certify a class of plaintiffs comprised of MAOs and downstream entities that made conditional payments for automobileaccidents medical claims, or in settlement of those claims, on behalf of Medicare beneficiaries who also had insurance coverage with Defendants. [DE 109 at 9].7

Defendants charge that Plaintiffs have improperly expanded and simultaneously defined a fail-safe class. They also argue that Plaintiffs have failed to satisfy any requirement of Rule 23.

B. Second Amended Class Action Complaint

In their Second Amended Class Action Complaint for Damages (“SAC”), Plaintiffs allege that Defendants systematically failed to repay Medicare liens, in violation of the MSPA [DE 98]. Plaintiffs assert a private cause of action for double damages under the MSPA’s provisions, namely 42 U.S.C. § 1395y(b)(3)(A) [DE 98 at 2,15]. The elements of the private cause of action are:¹) a defendant’s status as a primary plan;²) a defendant’s failure to provide for primary payment or appropriate reimbursement; and³) damages. The SAC alleges that Defendants’ no-

permitted to analyze Defendant’s data, any of its third-party claims’ administrator settlement data, and putative class members’ data. fault and liability policies are primary plans, which render Defendants primary payers for accident-related medical expenses under 42 U.S.C. § 1395y(b)(3)(B)(ii). The SAC identifies several assigned representative entities, such as AvMed, Blue

Cross and Blue Shield of Massachusetts, Inc., Health Alliance Medical Plans, Inc., and Health First Health Plans, Inc. Plaintiffs also list 67 exemplars of these entities’ claims for¹) unreimbursed Medicare liens;²) liens arising from settlements; and³) liens arising from no-fault policies. [DE 98 at 3-5]. Thus, Plaintiffs maintain Defendants are liable to MAOs and downstream entities for reimbursement of conditional payments. [DE 98 at 15].

Defendants’ Answer raises eleven Affirmative Defenses, including: failure to meet the threshold amount of the MSPA; statute of limitations, failure to sue the correct party, lack of standing, failure to exhaust administrative remedies, and improper attempt to collect duplicate payments. [DE 106 at 24-30]. Defendants also raise a variety of contract defenses, e.g. failure to establish that the treatments at issue were related to the accidents in question, failure to establish that the treatments at issue were for medically necessary services, failure to establish that the claims at issue pertained to insurance policies with unexhausted limits. Defendants additionally contend that coverage was denied on some claims due to specific applicable coverage or applicable state insurance laws. [DE 106 at 26-27]. Defendants further assert that Plaintiffs cannot show that Defendants violated the MSPA or are liable for double damages because Plaintiffs failed to provide notice of the conditional payments, and, because for several of the claims, although Defendants reported the claims to Medicare, they were advised that no liens existed. [DE 106 at 26-27]. For almost every one of the Affirmative Defenses, Defendants specifically point to one of Plaintiffs’ exemplar claims as an example of an exemplar meeting that particular defense.

C. Putative Class Definitions

Plaintiffs’ definitions of the two putative classes have evolved. The Plaintiffs explained the reason for the change was to “streamline and clarify” the class membership and to remove any link between membership and liability to avoid impermissible fail-safe class definition. [DE 109 at 12, fn⁴].

In the SAC, Plaintiffs assert two putative class definitions: Contractual Obligations Class All non-governmental organizations, and/or their assignees, that provide benefits under Medicare Part C, in the United States of America and its territories, who made payments for automobile accident-related medical items and services on behalf of their beneficiaries, for which the Defendants have provided no-fault insurance coverage related to the medical items and services involving automobile accidents, and for which the Defendants have not reimbursed in full or in part.

Settlement Class All non-governmental organizations, and/or their assignees that provide benefits under Medicate Part C, in the United States of America and its territories, who made payments for medical items and services on behalf of their beneficiaries for which Defendants have not reimbursed in full or part after Defendants entered into settlement with Medicare Beneficiaries enrolled in a Medicare Advantage Plan.⁸

[DE 98 at 12-13].

The Settlement Class All MAOs and downstream entities that provide benefits under Medicare Part C, in the United States of America and its territories, who made conditional payments as secondary payers for medical items and services on behalf of their beneficiaries who also had third-party insurance coverage, such as bodily injury insurance coverage, with the Defendants.

[DE 109 at 11].

IV. Legal Analysis

A. Ascertainability and Inadequate Class Definition

1. Ascertainability

Rule 23 implicitly requires that a proposed class be “adequately defined” and “clearly ascertainable.” Cherry v. Dometic Corp., 986 F. 3d 1296, 1302-03 (11th Cir. 2021). A proposed class is clearly ascertainable if its membership is “capable of being determined.” Id. at 1303 (citation omitted). An inadequate class definition contains “vague or subjective criteria.” Id. at 1302. While these terms (“adequately defined” and “clearly ascertainable”) are separate, the inquiry is “collapsed” into one. Id. at 1302 (citation omitted).⁹

The court must weigh any manageability concerns against the advantages of proceeding as a class action. Id. Fla. Racing Ass’n, LLC, No. 18-CV-24264-UU, 2019 WL 3890314, at *5 (S.D. Fla. June 28, 2019) (rejecting class certification where plaintiff amended class definition to expand scope of class). Thus, neither new definition is overbroad in that sense.

However, viewing the new definitions in the light most favorable to the Plaintiffs, the Court concludes the definitions are not ascertainable and are vague. By removing the language as to reimbursement and settlement in the “Settlement Class” definition, the Plaintiffs have left the Court with more questions than answers regarding who shall receive notice as members of the class. This definition potentially includes in the class members who may not have been injured,

such as Medicare beneficiaries who also happen to have any type of overlapping first-party or third-party insurance coverage. Walewski v. Zenimax Media, Inc., 502 Fed. App’x 857, 861 (11th Cir. 2012) (finding overbroad class definition which included potentially uninjured parties). Therefore, the Settlement Class definition is vague given the fact that it potentially opens the class to non-qualifying members. While the mere presence of uninjured class members does not necessarily preclude class certification, “a class should not be certified if it is apparent that it contains a great many persons who have suffered no injury at the hands of the defendant.” Ohio State Troopers Ass'n, Inc., 481 F. Supp. 3d at 1274, aff'd, No. 20- 13588, 2021 WL 4427772 (11th Cir. Sept. 27, 2021) (citing Cordoba, 942 F. 3d at 1275–76). In addition, Plaintiffs failed to describe any sort of mechanism for identifying other MAOs or downstream entities, other than MSP, who made conditional payments under Medicare Part C for beneficiaries who either had first party insurance with the Defendants (the No-Fault Class), or third-party insurance with the Defendants (the Settlement Class). Thus, given the proposed class definitions, the class is not ascertainable.

2. Inadequate Class Definition

If the Court could give notice to class members under the Plaintiffs’ new definitions, the inevitable result is a fail-safe class. A fail-safe is a class that only includes those who are first determined to be entitled to relief. Randleman v. Fidelity Nat. Title Ins. Co., 646 F. 3d 347, 352 (6th Cir. 2011). Such a class

“precludes the possibility of an adverse judgment against class members; the class members either win or are not in the class.” In re Rodriguez, 695 F. 3d 360, 369-70 (5th Cir. 2012) (citation omitted). Id. at 370 (citations omitted). The Eleventh Circuit has declined to “promot[e]” fail-safe classes but has not expressly forbidden them. See Cordoba v. DIRECTV, LLC, 942 F. 3d 1259, 1276–77 (11th Cir. 2019). Other courts, however, have found them impermissible. Atlantic Specialty Ins. Co. at *2.

Even though the Plaintiffs have tried, the new definitions do not avoid failsafe issues. Class member eligibility in both the SAC and Motion for Class Certification hinge on elements that mirror the exact elements necessary to establish Defendants’ liability. Specifically, the new definitions both note that the Plaintiffs are seeking to recover “conditional payments as secondary payers.” Such legal definitions require individual litigation to determine whether a class member is in fact a secondary payer who made a conditional payment for which reimbursement is deserved. This is a classic fail-safe class. See, e.g. MSP Recovery Claims, Series LLC v. Plymouth Rock Assurance Corp., 404 F. Supp. 3d 470, 485 (D.

Mass. 2019) (striking class action where a finding of liability was a prerequisite for class membership. At least one Florida District Court has rejected Plaintiffs’ contention that such a class was ascertainable and did not create a “fail-safe” class. MSP Recovery Claims Series, LLP v. Atlantic Specialty Insurance Company, 2021 WL 6750961 (M.D. Fla., Case No. 6:20-cv-553-RBD-EJK, Signed 12/27/2021). Notwithstanding these serious prerequisite ascertainability issues, the request for class certification meets only one of Rule 23(a)’s four requirements and most importantly fails under Rule 23(b)(3)’s predominance requirement. B. Fed. R. Civ. P. 23(b)(3)10

1. Questions of Law and Fact Do Not Predominate

Rule 23(b)(3) first requires a finding “that the questions of law or fact common to class members predominate over any questions affecting only individual members,” and then “that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3).11

Cir. 2019), the Eleventh Circuit made clear that § 1395y(b)(2)(B) (“Conditional Payment”) only provides a private cause of action when an entity’s status as a primary plan has been demonstrated. Id. at 1321-22. In other words, once it is established that an MAO made a conditional payment and it is demonstrated that an insurance company defendant is a primary plan that may have reimbursement responsibility, such facts are only sufficient to establish that the MAO may proceed under the MSPA private cause of action. Those facts do not establish the insurance company’s liability for failing to provide primary payment or appropriate reimbursement. Likewise, in MSP Recovery, LLC v. Allstate Ins. Co., 835 F 3d 1351 (11th Cir. 2016), the reviewing court held that a contractual obligation may serve as sufficient demonstration of responsibility for payment to satisfy the condition precedent to suit under the MSPA. Id. at 1361. It further held that satisfying that precedent did not relieve plaintiffs of their burden to allege in their complaints, and then subsequently prove with evidence, that defendants’ valid insurance contracts actually render defendants responsible for primary payment of the expenses plaintiffs seek to recover. The court further stated that defendants may still assert any valid contract defense in arguing against their liability. In short, although a contractual obligation may satisfy the demonstrated responsibility requirement, that contractual obligation does not conclusively determine liability under MSPA. The facts and holdings of Humana, Tenet, and Allstate do not support

Plaintiffs’ arguments for class certification. If the putative classes are composed of hundreds of entities and represent thousands of unreimbursed claims as Plaintiffs contend, that will consequently lead the Court to consider thousands of individual claims, settlement agreements, injuries, contractual defenses, and so on. Taking Plaintiffs’ case as a stand-alone cause of action, containing five downstream entities, demonstrates how individualized assessing Plaintiffs’ claims are. As such,

common issues do not predominate beyond establishing, through Plaintiffs’ data matching software, that Defendants may potentially be a primary plan.¹³

2. Class Action Treatment is Not Superior

Rule 23(b)(3) also requires a finding “that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” For the same reasons discussed above related to predominance, class action is not superior to other available methods for resolving Plaintiffs’ claims. In addition to the need for the Court to examine each reason that the Defendants did not adequately reimburse for the conditional payments to determine liability, it is not even clear whether all of the underlying claimants are covered by applicable policies, are

As explained below, in addition to failing to meet the requirements of Rule 23(b)(3), Plaintiffs failed to present sufficient evidence to satisfy all of the Rule 23(a) prerequisites. Plaintiffs only satisfy one.

1. Numerosity

Rule 23(a)'s numerosity element requires that “the class is so numerous that joinder of all members is impracticable.” Fed.R.Civ.P. 23(a)(1). Although numerosity is a “generally low hurdle,” it is, nonetheless, a hurdle. Vega v. T- Mobile, 564 F. 3d 1256, 1267 (11th Cir. 2009). While mere allegations of numerosity are insufficient to meet this prerequisite, a plaintiff need not show the precise number of members in the class. Evans v. U.S. Pipe & Foundry Co., 696 F. 2d 925, 930 (11th Cir.1983). Further, Plaintiffs still bear the burden of making some showing, affording the district court the means to make a supported factual finding, that the class actually certified meets the numerosity requirement. Id.

Plaintiffs contend that there are 937 directly contracted MAOs and hundreds of first-tier and downstream entities with MSP Act claims against Defendants. [DE 109 at 19]. Plaintiffs also provide exemplars of five allegedly injured MAOs and downstream entities, representing more than fifty claims. Defendants do not seriously challenge this assertion. In fact, Defendants, in attacking Plaintiffs’ class definition, concede that “downstream entities” may be any type of medical provider who provides services to an MAO patient. Thus, based upon the number of potential downstream entities and other MAOs, in conjunction with Plaintiffs’ sixty-seven provided exemplar entities, the Court finds that

Plaintiffs satisfy the low hurdle of Rule 23(a)(1)’s numerosity requirement.

2. Commonality

Rule 23(a)’s commonality requirement demands only that there be “questions of law or fact common to the class.” Fed.R.Civ.P. 23(a)(2). “Commonality” does not require that all the questions of law and fact raised by the dispute be common, or that the common questions of law or fact “predominate” over individual issues. Vega, 564 F. 3d at 1268 (quotations and citations omitted). Rather under this requirement, a class action must involve issues that are susceptible to classwide proof.” Id. at 1269 (quotations and citations omitted). Plaintiffs identify the following as common questions for the No-Fault Class:¹) whether overlapping coverage exists (a common factual question) giving rise to primary payment responsibility (a common legal questions);²) whether Defendants accepted coverage (a common factual question) giving rise to primary payment responsibility (a common legal question); and³) whether Defendants repaid the Medicare liens (a common legal and factual question). [DE 109 at 20]. Plaintiffs contend that the same common questions apply to the Settlement Class and that objective data will provide class-wide answers to the common questions. [DE 109 at 20]. Rule 23(a)(2)’s commonality requirement is a “relatively light burden.” Id. at 1268. Yet, given the issues regarding the class definitions and liability determinations discussed in earlier in Sect. IV, Plaintiffs fail to satisfy this requirement. While Plaintiffs have described common questions of law and fact, those questions are not “susceptible to class-wide proof.” Murray v. Auslander, 244 F. 3d 807, 811 (11th Cir. 2001). The determination will be specific for a given putative class member, precluding Plaintiffs’ ability to offer “proof [that] the court can resolve the questions of law or fact in ‘one stroke’.” Randolph v. J.M. Smucker Co., 303 F.R.D. 679, 693 (S.D. Fla. 2014) (citation omitted). Plaintiff seems to argue the efficiency of its data-matching system as the simple stroke, but that does not make the question one the Court could make for all or even a portion of class members. By its very nature, the answer to the question will apply to a given claim, not a class or subclass. As a result, the Court acknowledges that the commonality requirement is a relatively low bar but is not persuaded that it could reach a class-wide determination on Plaintiffs’ proposed questions that is not either already resolved by the class definition, or only applies to a given class member. Plaintiffs’ Motion does not suggest any additional question of law or fact, nor has the Court identified one. Therefore, the Court finds that Rule 23(a)(2)’s requirement has not been met.

3. Typicality

Typicality requires that “the claims or defenses of the representative parties are typical of...the class.” Fed. R. Civ. P. 23(a)(3). “A class representative must possess the same interest and suffer the same injury as the class members in order to be typical under Rule 23(a)(3). [T]ypicality measures whether a sufficient nexus exists between the claims of the named representatives and those of the class at large.” Vega at 1275 (citing Busby v. JRHBW Realty, Inc., 513 F. 3d 1314, 1322 (11th Cir. 2008) (quotations and internal citations omitted; alteration in original). Although typicality and commonality may be related, the two concepts are distinguishable— “[t]raditionally, commonality refers to the group characteristics of the class as a whole, while typicality refers to the individual characteristics of the named plaintiff in relation to the class.” Id. (citing Piazza v. Ebsco Indus., Inc., 273 F. 3d 1341, 1346 (11th Cir. 2001)).

For the same reasons discussed in Sect. IV.A. regarding the Plaintiffs’ class definition issues, the Court is unable to determine whether there is a significant nexus between Plaintiffs’ claims (as the named representative) and the class at large to satisfy the typicality requirement. It is unclear how many other potential class members are in the same “shoes” as the Plaintiffs. Remaining unanswered are the questions of: whether those other potential plaintiffs received their right to sue Defendants through an assignment, whether that assignment is valid, whether the putative members made conditional payments on the same basis, whether the beneficiaries were covered under Defendants’ same or similar overlapping insurance policies, whether the putative class members were reimbursed in part, or full, and whether the defenses raised by the Defendants as to the underlying claims for those MAOs and downstream entities will be the same as those raised as to the exemplar claims. Those questions go to the heart of whether the exemplar claims’ individual characteristics are typical of the putative class members, and thus the Court is unable to conclude that Plaintiffs have met their burden under this prong.⁴, Adequacy Likewise, while the parties hotly contest whether counsel would be appropriate to represent any class, given the above rulings, the Court “declines [the] invitation to explore this unnecessary fray.” See Bouton, 322 F.R.D. at 700. The Court simply notes that Plaintiffs organizational structure and ownership built upon privately compiling as many MSP Act claims as possible, calls into question whether Plaintiff is best suited to represent any putative class.

V. Conclusion

At bottom, for the reasons discussed above, this action is not suited for class-action management and resolution. Plaintiffs are unable to meet their initial burden of demonstrating that the class is ascertainable and adequately defined. The class definitions either determine liability or result in individualized attention to defenses to liability, which runs afoul of the Rule 23 requirements. Therefore, it is

ORDERED THAT

1. Plaintiffs’ Motion for Class Certification [DE 109] is DENIED. 2. Plaintiffs’ Motion for Hearing on this Motion [DE 118] is DENIED as moot. DONE AND ORDERED in Miami, Florida, this 7th day of June, 2022.

. ati.

UNITED STATES SENIOR DISTRICT JUDGE